Disciplinary Committee (Bench-IV) of the Institute of Chartered Accountants of India (ICAI), through an order dated 16th May 2024, found CA Jayshankar Mishra guilty of professional misconduct under Items (7) and (8) of Part I of the Second Schedule of the Chartered Accountants Act, 1949. The complaint, filed by CA Neeraj Kumar Singh, pertained to the certification of Form STK-2 for a company despite the presence of outstanding audit fees payable to the complainant, as reflected in the company’s financial statements for FY 2017–18. The Committee noted that the Respondent failed to verify the factual correctness of the declaration in Form STK-2, instead relying solely on an indemnity bond and internal declarations.
The Respondent admitted the mistake during the hearing held on 28th March 2024 and provided written justification, citing procedural ambiguity and guidance from ROC customer care. He contended that the ROC was expected to reject the form or deem it invalid, and hence, he did not resubmit it. He also argued that the lapses were minor and did not amount to misconduct, referencing a Calcutta High Court judgment.
However, the Committee concluded that the responsibility of verifying the accuracy of filings lay with the CA and that failure to do so breached professional standards. The Committee decided that a reprimand under Section 21B(3)(a) was appropriate in this case. Accordingly, CA Jayshankar Mishra was officially reprimanded for his actions.
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
[DISCIPLINARY COMMITTEE [BENCH-IV (2024-2025)]
[Constituted under Section 216 of the Chartered Accountants Act, 1949]
ORDER UNDER SECTION 218(3) OF THE CHARTERED ACCOUNTANTS ACT, 1949 READ WITH RULE 19(1). OF THE CHARTERED ACCOUNTANTS (PROCEDURE OF INVESTIGATIONS OF PROFESSIONAL AND OTHER MISCONDUCT AND CONDUCT OF CASES) RULES, 2007.
[PR/280/2021/00/298/2021[0C/1608/2022]
In the matter of:
CA. Neeraj Kumar Singh ….Complainant
Versus
CA. Jayshankar Mishra
Partner, M/s M M H & Co.,
Chartered Accountants…Respondent
MEMBERS PRESENT:
1. CA. Ranjeet Kumar Agarwal, Presiding Officer (In person)
2. Shri Jiwesh Nandan, I.A.S (Retd.), Government Nominee (In person)
3. Ms. Dakshita Das, I.R.A.S. (Retd.), Government Nominee (Through VC)
4. CA. Mangesh P Kinare, Member (In person)
5. CA. Abhay Chhajed, Member (In person)
DATE OF HEARING : 28th MARCH, 2024
DATE OF ORDER : 16th May, 2024
1. That vide Findings dated 05.02.2024 under Rule 18(17) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, the Disciplinary Committee was inter-alia of the opinion that CA. Jayshankar Mishra (hereinafter referred to as the Respondent”) is GUILTY of Professional Misconduct falling within the meaning of Item (7) and Item (8) of Part (I) of the Second Schedule to the Chartered Accountants Act, 1949.
2. That pursuant to the said Findings, an action under Section 21B(3) of the Chartered Accountants (Amendment) Act, 2006 was contemplated against the Respondent and a communication was addressed to him thereby granting an opportunity of being heard in person/ through video conferencing and to make representation before the Committee on 28th March 2024.
3. The Committee noted that on the date of hearing on 28t” March 2024, the Respondent was present through video conferencing. During the hearing, the Respondent stated that he had already submitted his written representation dated 24th February 2024 on the Findings of the 1 Committee. The Respondent admitted the mistake and further stated that the Director of the Company told him that the payment was made to the Complainant but the Complainant had denied the receipt of any payment. The Respondent further stated that he did not resubmit the Form for the reason that the Form already submitted would be rejected. The Committee also noted the written representation of the Respondent dated 24th February 2024 on the Findings of the Committee, which, inter alia, are given as under:-
(a) No compliance has been done for the financial years 2018-2019 and 2019-2020 and ROC have issued Form STK-7 on 04/02/2021 giving reference of Form STK-2 filed earlier instead of rejecting the Form.
(b) Sub rule (4) of Rule 10 of the Companies (Registration Offices and Fees) Rules, 2014, states that where such further information called for has not been provided or has been ‘furnished partially or defects or incompleteness has not been rectified, the Registrar shall either reject or treat the application or e-form or document, as invalid in the electronic record.
(c) That as per the above Rule, Form STK-2 filed shall be rejected or shall be treated as invalid in the electronic record.
(d) The person in the ROC office on customer care number also told the Respondent that the Form has been sent for re-submission and it will be rejected if not replied within the time % Keeping these provisions and conversation, he did not consider it appropriate to resubmit the Form.
(e) That minor errors and lapses, if any, cannot constitute professional misconduct as per judgment of the Hon’ble Calcutta High Court in the case of S.Ganesan v. A.K. Joscelyne.
(f) The Respondent prayed to the Committee for lenient view in the matter.
4. The Committee considered the reasoning as contained in Findings holding the Respondent ‘Guilty’ of Professional Misconduct vis-a-vis written and verbal representation of the Respondent. The Committee noted that the issues/ submissions made by the Respondent as aforestated have been dealt with by it at the time of hearing under Rule 18.
5. Thus, keeping in view the facts and circumstances of the case, material on record including written and verbal representation of the Respondent on the Findings, the Committee noted that while certifying Form STK-2, the Respondent was required to ensure whether the facts/details given in the Form STK-2 were correct or not. However, the Respondent only relied upon the indemnity bond of the Company and the declaration given in Form STK-2 was found to be incorrect for the reason that the outstanding audit fee payable to the Complainant is reflected in the Balance Sheet for the year ended 31st March, 2018. Therefore, the Committee held that the Respondent cannot be absolved of his responsibility in complying with the provisions of Companies Act 2013 and related Rules made thereunder. Hence, the Professional Misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 05th February 2024 which is to be read in consonance with the instant Order being passed in the case.
6. Accordingly, the Committee was of the view that the ends of justice would be met if punishment is given to him in commensurate with his Professional Misconduct.
7. Thus, the Committee ordered that the Respondent i.e., CA. Jayshankar Mishra , be REPRIMANDED, under Section 21B(3)(a) of the Chartered Accountants Act,1949.
Sd/-
(CA. RANJEET KUMAR AGARWAL)
PRESIDING OFFICER
Sd/-
(SHRI JIWESH NANDAN, I.A.S. {RETD.})
GOVERNMENT NOMINEE
Sd/-
(MS. DAKSHITA DAS, I.R.A.S.{RETD.})
GOVERNMENT NOMINEE
Sd/-
(CA. MANGESH P KINARE)
MEMBER
Sd/-
(CA. ABHAY CHHAJED)
MEMBER
